490/ 2021 Arun Advani, Andy Summers and Hannah Tarrant

We compare two approaches to measuring UK top income shares—the share of income going to particular subgroups, such as the top 1%. We set out four criteria that an ideal top share series should satisfy: (i) comparability between numerator and denominator; (ii) comparability over time; (iii) international comparability; and (iv) practical sustainability. Our preferred approach meets three of these; by contrast the approach currently used to produce UK fiscal income series meets none of them. Changing to our preferred approach matters quantitatively: the share of income going to the top 1% is 2 percentage points higher, but rising more slowly, than under the alternative.

Public Policy